5 Myths About Selling to Local Governments
There are no doubts that selling to the local government is hard, but it is NOT impossible. After all, you have probably already seen a few (if not many) local governments making procurements that, at first sight, look illogical or even irrational. Yet, a few myths about selling to local governments persist, potentially making it even harder for some companies to join the ride. We're here to squash those myths. Read on for details...
Myth 1: Local governments give notice of upcoming projects 21 days in advance
...and that isn't enough time to respond.
By the time a local government has worked through all the details of what they need to buy and publishes a bid or RFP online, vendors might have seen the public bid deadline (often 21 days out) and concluded it is not enough time to respond.
However, you can learn about upcoming projects long before the bid or RFP is published. Tap into local government's spending and planning data such as past procurement history, agency budgets, capital improvement plans and term contracts - and learn about upcoming work months or years in advance.
Vendors can also utilize publicly available information to identify key agency contacts such as the procurement officer, buyer or decision-maker on the project — then connect with these individuals by email or phone to build relationships.
In addition, as a vendor, you can learn about upcoming projects in advance and become a valuable resource to those agency contacts to help them better construct their next bid or RFP. Establish yourself as an expert in the market and position your business for success in your next bid or RFP response.
Myth 2: State and local agencies only buy from big corporations
This could be true in some instances, but not all. Local utilities seldom buy equipment from small and medium enterprises, but there is no good reason why would they procure every single item from a major corporation.
For one thing, many local governments aim to support small and even minority-owned businesses and one of the ways they do that is through their procurement processes.
In the United States, federal agencies have a goal of reserving 23% of contracts for small businesses. There is no uniform goal across state and local governments; however, many agencies publish their goals on their websites. For instance, the State of New York's target is 30% for state contracting and New Jersey has a goal of 25%.
At the city level, one example is the City of Chicago that offers a business certification process for disability-owned businesses for municipal procurements.
A different option, if these types of agency goals or set-asides are not available, is to team up with other vendors who are adept at handling large contracts and inquire about working as a subcontractor on their next project. As they say it - "if you can't beat them, join them" and work as a subcontractor.
Myth 3: State and local agencies are only looking for vendors who can supply huge volumes
Related to the previous point, you may think that state and local agencies are only working with companies that can supply huge volumes. That is not necessarily true with various agencies making regular smaller purchases throughout the year. It is during these procurements that you get the opportunity to provide lower volumes.
To make this possible, a vendor should establish their business as a reliable partner for smaller purchases. The goal here is to score a term contract under which the vendor would supply products on an "as needed" basis over the length of the contract.
In addition, many state and local purchasing agents have discretionary power to spend without approval and/or going through the official bid/RFP process — sometimes at a significant spending level. Again, the goal is to be "top of mind" with that agent so that your business shows up as a vendor of choice for the next procurement.
Myth 4: State and local governments aren't open to the latest technology
It is true that state and local governments seldom go for the latest technology; rather, they prefer tested solutions that are easier to sell to their constituents. The old saying "nobody ever got fired for buying IBM" is still true today, except that these days IBM is replaced (in that sentence) with some other well-established company or technology.
Generally speaking, the public sector lags behind the private sector from one to five years (or more) because of an inherent bias against being the first adopter.
Nevertheless, there are bold cities and bold leaders that are willing to bet on new technologies. That way they can sell themselves and their city as modern, one that is open to young and innovative individuals and companies. As someone looking to sell to the public sector, you should emphasize that. There is no reason why places like San Francisco or Stockholm in Sweden must be first — other cities can join the high-tech ride, as well.
After a few years, many of those technologies will find their place in most cities around the world, and there are (or could be) benefits to be in the first batch.
Myth 5: Public sector only makes purchases according to the fiscal year
While it is true that the public sector tends to be more organized in their spending — in many cases they have to vote on their budget every year — there are exceptions and the money left for unexpected purchases that is not timed with the fiscal year or the previously agreed on buying plan. Depending on what you're selling, you can get under the radar and score a contract with a novel offering.
The way to do this is to track local government spending and potentially identify buying patterns. For instance, there are cities and agencies that front-load spending at the beginning of the fiscal year once the budget is approved and also those that back-load, save their cash and make the majority of their purchasing decisions in the final quarter of the fiscal year. Others spread their spending evenly across the year. Vendors should know the buying habits and fiscal years (calendar) to better strategize, plan and focus on the right time for sales and marketing efforts to win more contracts.
The bottom line is - ignore the myths, and rather focus your efforts on sales and networking. Presuming you have an offering that could be the right fit for the city or public agency you're targeting, engage with local representatives and start selling them your offering.
The problem, however, could be in another question - what to sell. And that's what Sustainable Avenue is all about, offering hundred (or so) projects that have been tested or fully implemented in municipalities all around the world. If you could just copy one of those projects, you could make a big splash. So make sure to sign-up for Sustainable Avenue and start scoring those government contracts — with neatly highlighted action points on the site helping you along the way.